Popular Refi Programs for Homeowners with Equity ~ Phoenix East Valley Real Estate

Interest rates have been hovering near all-time lows for weeks now, and many people are watching reports on both how low rates are as well as “new” refinancing programs such as the HARP refinance for underwater borrowers.

But what if you don’t currently owe more on your mortgage than your house is worth? Can you still refinance?

Of course!

In fact, in many circumstances it will actually be easier to refinance if you have equity in your home.
When considering refinancing, the first step is to identify your goal. Do you just want a lower monthly payment? Do you want to get cash in exchange for some of the equity you have built up in your home?

Once you have identified your goal, the second step is to learn more about the refinance program that will best match your needs.

Conventional refinance
If your loan is backed by Fannie Mae or Freddie Mac, it is considered a “conventional” loan. Refinancing a conventional loan is the most common refinance option. Highlights of conventional refinance programs include:

Appraisal required
Full employment and income verification
Employment history of two years
620 credit score
Popular to go from 30-year term to 15-year term
95 percent loan-to-value with mortgage insurance, 80 percent without
Lender credit allowed to cover closing costs

FHA streamline refinance
The FHA streamline refinance program is designed for people who currently have a Federal Housing Administration (FHA) loan and just want to lower their monthly payments. If you have done an FHA streamline refinance in the past, you may still be eligible to do another FHA streamline as long as it benefits you financially. Highlights of the FHA streamline program include:

No appraisal required
No income verification
No credit score verification required by HUD, but payment history will be considered
Low fixed rates
Lender credit allowed to cover closing costs

VA streamline refinance
The VA streamline refinance is a popular program for veterans or active-duty military personnel who have a Veterans Affairs loan. Similar to the FHA streamline, the VA streamline is designed for people who want to lower their monthly mortgage payment without getting cash out. Highlights of the VA streamline program include:

No appraisal required
No income verification
No credit score verification required by HUD, but some lenders may set minimum score requirements
Low fixed rates
Reduced funding fee requirement (0.5 percent)
Lender credit allowed to cover closing costs

Cash-out refinance
In the event that you want to convert part of your home’s equity to cash, there are programs called “cash-out” refinance programs. FHA, VA and conventional loans all have different cash-out refinance requirements, but generally speaking, here are some highlights of what to expect:

Appraisal required
Full income and employment verification
620 credit score
85 percent loan-to-value for FHA; 80 percent for conventional; 100 percent for VA
Lender credit allowed to cover closing costs

While rates are low, it will often make sense to refinance — whether you want to get cash out of the equity of your home or just lower your monthly mortgage payment. In each of the above scenarios, one thing sticks out regardless of which program you’re interested in: "Lender credit allowed to cover closing costs."

Let your lender pick up the tab for you!

via yahoo homes